January 2014

January 17, 2014

According to new statistical information just released by the American Bankruptcy Institute (ABI), and based on information compiled by Epiq Systems, Inc, 2013 saw bankruptcy filings total 1,032,326, which is a 13% decrease from the 1,186,137 cases filed in 2012. When further analyzed, there was a 12% decrease in the number of non-commercial filings, but a 24% decrease in the commercial filings (44,111 vs 57,964 filings).

According to the ABI, the 2013 filings were the lowest total since 2007, and the filings have been dropping annually since 2010. It is also predicted that the filings will continue to drop in 2014, due to the low interest rates and high legal and filing fees costs associated with filing for bankruptcy.

A curious effect of this is that the decrease in filings is having a significant impact on the bankruptcy court system itself, which is partially funded from the actual filing fees received when bankruptcy cases are filed. As filings decrease, so do the funds to run the court. While the actual number of cases has decreased, the courts report that their work has actually increased, due to more matters being litigated in the court, so we have a crisis of growing need coupled with fewer funds to pay for the court’s operations.

Finally, while the average national per capita bankruptcy filing rate for 2013 decreased to 3.33 per 1,000 population from 2012’s 3.83 rate, some states had significantly higher filing rates. The top five were Tennessee (6.59), Georgia (5.74), Alabama (5.65), Utah (5.16) and Indiana (5.00).

January 03, 2014

Ocwen Loan Servicing, LLC and Ocwen Financial Corp. entered into an agreement on December 19th 2013 with the US Consumer Financial Protection Bureau (CFPB) and the Attorneys General of 49 states and the District of Columbia to provide approximately $2.1 billion in relief to homeowners experiencing financial distress. The settlement provides that Ocwen will pay $127.3 million into a fund that will used to provide cash payments to borrowers whose homes were sold at foreclosure between during 2009 through 2012. Ocwen will also provide $2 billion in relief to eligible consumers by reducing their principal due under their mortgage loans.

This settlement comes as a result of allegations by the CFPB and the states that Ocwen engaged in the following improper acts and practices, among others:

Failing to timely and accurately apply payments made by borrowers and failing to maintain accurate account statements;

Charging unauthorized fees for default-related services;

Imposing force-placed insurance when Ocwen knew or should have known that borrowers already had adequate homeowners coverage;

Providing false or misleading information in response to borrower complaints;

Failing to provide accurate and timely information to borrowers who seek information about loss mitigation services, including loan modifications;

Falsely advising borrowers that they must be at least 60 days delinquent in loan payments to qualify for a loan modification;

Misrepresenting to borrowers that loss mitigation programs (e.g., loan modification or short sale) would provide relief from the initiation of foreclosure or further foreclosure efforts;

Providing false or misleading information to consumers about the status of foreclosure proceedings;

Providing false or misleading reasons for denial of loan modifications

The settlement must still be approved by the United States District Court in Washington, DC before it becomes effective. The CFPB has stated that eligible borrowers may be contacted by Ocwen directly or may contact Ocwen themselves at 800-337-6695 or [email protected] to see if they may be impacted by the settlement.